A novel rate control algorithm for extremely low bit rate and wireless channels is specified in this paper. The algorithm does rate analysis at an MB (Macro Block) level, and extracts the energy from motion and texture characteristics, finally allocates bits and controls the fluctuation according to the MB energy. Experimental results show that a higher accuracy of allocation of bit rate is achieved and the output bit rate is much smoother, as well as the improvement of subjective quality is considerable. A novel rate control algorithm for extremely low bit rate and wireless channels is specified in this paper. The algorithm does rate analysis at an MB (Macro Block) level, and extracts the energy from motion and texture characteristics, finally allocates bits and controls the fluctuation according to the MB energy. Experimental results show that a higher accuracy of allocation of bit rate is achieved and the output bit rate is much smoother, as well as the improvement of subjective quality is considerable.